Google buys Fitbit for $2.1 billion
(AP) — Google, the company that helped make it fun to just sit around surfing the web, is jumping into the fitness-tracker business with both feet, buying Fitbit for about $2.1 billion.
The deal could put Google in direct
competition with Apple and Samsung in the highly competitive market for
smartwatches and other wearable electronics. But it also raises questions about privacy and Google’s dominance in the tech industry.
The
company’s announcement Friday came with a promise that it won’t sell
ads using the intimate health data that Fitbit devices collect.
Fitbit
is a pioneer in wearable fitness technology, making a range of devices
that have become pop-culture accessories, from basic trackers that count
how many steps you take each day to smartwatches that display messages
and notifications from phones.
They can track activities such as
running, cycling and swimming and record heart rates and sleep patterns.
Fitbit typically asks for date of birth, gender, height and weight to
help with such things as estimating calories burned. Some people use
Fitbit’s app to record what they eat and how much water they drink.
Women can track their periods.
Fitbit has 28 million active users worldwide and has sold more than 100 million devices.
Google,
meanwhile, makes software for use in other manufacturers’ wearable
devices, but those products haven’t gained much traction in the face of
competition from Fitbit, Apple, Samsung and others. And Google doesn’t
sell a device of its own.
The deal to buy Fitbit could give Google a needed boost.
“Google
doesn’t want to be left out of the party,” said analyst Daniel Ives of
Wedbush Securities. “If you look at what Apple has done with wearables,
it’s a missing piece of the puzzle for Google.”
Google’s pledge that it won’t sell ads using Fitbit health data is a continuation of promises previously made by Fitbit.
Privacy experts, though, were skeptical.
Consumer
Reports health privacy expert Dena Mendelsohn said she is concerned
that people enrolled in wellness programs through their employers that
use Fitbit devices could lose control over their data.
“While a
person may not have had concerns about Fitbit holding their data, they
may have concerns over Google holding their data,” Mendelsohn said.
Google’s promise is also unlikely to stop it from gathering other information from Fitbit devices.
For
example, Fitbit has GPS models that could track users’ locations. That
could help Google know that a runner stopped at a coffee shop on the way
home. Google could then display ads for rival coffee shops.
More
important, having a Google device on the wrist could drive wearers to
use Google services even more, giving the company more ways to sell ads.
The
deal is likely to face scrutiny from state and U.S. Department of
Justice antitrust authorities, who are already investigating Google and
other big tech companies over whether they have abused their market
power.
“Why should Google be permitted to acquire even more
companies while they’re under DOJ antitrust investigation?” Sen. Josh
Hawley, a Missouri Republican, tweeted.
Still, analysts at equity
research firm Cowen said they believe regulators are unlikely to block
the deal because of Fitbit’s relatively small size and its focus on
hardware.
While Fitbit all but created the field, it has been
shredded by the competition. It was worth nearly $10 billion after it
went public in 2015. But its value this week is well below $2 billion.
When
rumors of a potential buyout by Google surfaced earlier this week,
Fitbit stock soared almost 30%. It jumped nearly 16% more Friday.
Google’s corporate parent, Alphabet, will pay $7.35 per share. Alphabet stock gained about 1%.
“With
Google’s resources and global platform, Fitbit will be able to
accelerate innovation in the wearables category, scale faster, and make
health even more accessible to everyone,” Fitbit co-founder and CEO
James Park said in a statement.
Fitbit has been expanding its partnerships with major health care companies such as Humana to encourage healthier living.
John
Hancock announced incentives last year on its insurance policies for
people willing share data gathered by health-monitoring devices. It
offers free Fitbits to participants.
Last year, Fitbit acquired a
health coaching business that helps people manage conditions such as
diabetes and high blood pressure.
Fitbit ranks fourth in global
shipments of digital watches, fitness trackers and other wrist-worn
devices, according to research firm IDC. Chinese companies Xiaomi and
Huawei were No. 1 and No. 3, Apple was No. 2, and Samsung came in fifth.
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AP Business Writer Michelle Chapman and Technology Writers Tali Arbel, Frank Bajak and Rachel Lerman contributed to this report.